Economic Inequality

1.     Yes, economic inequality exists in the United States.  In fact, according to inequality.org, the upper class had an average of $1,300,000 after tax. While the middle class had less than $200,000.  Nick Hanauer states that the income for the wealthy has tripled since the 80’s. At the same time, taxes have gone down by 50%. Hanauer also argues that as the wealthy are getting wealthier from these tax cuts, the poor have gotten even poorer, while prices have gone up tremendously. According to the statistics at inequality.org, the gap between the wealthy and the middle and lower classes has been increasing at a fast rate. According to a graph of real median household income, the median income for American families in 2009 was $47,777. Half of the American families in this graph had a greater income than that amount and the rest owned less money. While middle and low class household's income have been decreasing, the upper class incomes have been increasing. According to data from the CEO income, salaries have gone up eight times the amount of the average CEO income in the mid 20th century. The increase in the upper class after tax income rose 281% while the middle class income grew 25%. There is clearly economic inequality in America and it should be solved.

2.     There are consequences of economic inequality. People will start at different points for success. For example according to Nick Holton, if a person at the lower income bracket is competing with a person at a higher income bracket, the rich will have a better chance because of the better quality education. It also causes the rich to get richer and the poor to get poorer as time goes on. However, this can also be seen as an incentive to work so people can get ahead and be successful. It can also be a reason for entrepreneurs to take risks and be competitive in the free market. Another factor is in crime and robbery. Many people commit crimes and riots today based on their poverty and their unfair opportunities in jobs. The power of the wealthy over the poor also arises in cases of what wages to give and the power of employing or firing people.

3.     Economic inequality can be addressed in two ways. The first way is to have the wealthy pay higher taxes to benefit the least well off and to achieve some sort of material equality. Warren Buffets states that it is unfair for the rich to not pay more and in some cases pay less than their secretaries in taxes. The wealthy are beig benefited by having lower taxes. According to Buffet, they should be paying higher taxes for some sense of fairness. The tax system in America is too “flat” and it should be more of a progressive tax system. The second approach is to keep government out of the way of small businesses to create jobs. That means have lower taxes for everyone, including small businesses and corporations because they are job creators and they can hire more people if they are taxed less. Instead of redistributing wealth, you can create more. If the taxes are higher, people can hire less.  According to Paul Ryan, 80% of these corporations that Warren Buffet says should be taxed more, pay their taxes as individuals. They should be taxed at a lower rate to create jobs and improve the economy.